Monday, November 27, 2006

CLEC Strategy 101

First, CLEC's went after the cheap buck (UNE-P). If they had sold regionally instead of nationally, they could have converted to UNE-L sooner. It would have taken the UNE-P bargaining chip off the table at the FCC. It could have added legs to UNE and EEL.

Second, CLEC's didn't learn from the Covad-Northpoint-Rhythms disaster - Three DLEC's cannot compete in the same MSA's. The DLEC's should have been sharing collocation and switches. (I understand why they don't). Cooperation would have given them leverage against the ILEC's. I fear that the cooperation that they spout at CompTel may be too little, too late.

Third, Nuvox claims $1B in investment. XO had about $1B in debt, so does the new Paetec. Where did all this money go???? Just these 3 CLEC's could have built a serious network in the Southeast to compete against BellSouth with $3B!!!

Fourth is Strategy. From Wikipedia : "An organization’s strategy must be appropriate for its resources, environmental circumstances, and core objectives." When you look at companies like Birch and MacLeod, companies that have used Bankruptcy as a business plan, you have to wonder what the strategy is/was. One reason why the strategy is cloudy is because everyone plays the musical chair game. Same faces in the same places just with new names on the business card. A fresh outlook and new set of eyes wouldn't hurt this industry at all.

Other than an Integrated T1, what innovation has the CLEC brought to market? Z-Tel used to offer a PVA (private virtual assistant) that was probably one of the first unified messaging platforms. Z-Tel should have rode that PVA horse harder (but didn't know what it had and it was easier to take orders for "10% off"). Shouting VOIP and Convergence is not a strategy - unless you are doing it to tweak your stock. Figuring out what you sell and to who is a strategy. Telling a compelling story about it to the target audience is marketing. The industry needs to move towards that.

I watch XO flounder in wireless, wholesale, and retail. Pick one. Please. You cannot be everything to everyone - learn from GM and Ford. USLEC was starting to do the same thing - SME, MDU, MegaPOP, VOD, wholesale ISP, wholesale VOIP. You only get to hold one Position in the Mind of the Customer. Just One. Focus is key. Focus means that you can concentrate on executing the strategy. Focus means that you will have a clear, concise message to your market. Focus means that the salespeople and agents will have a firm grasp on what they sell. Dell had focus:

[Dell's] success is a result of focusing on improving delivery times, cutting operation costs and maintaining customer service levels. The shorthand version of their business strategy is that Dell cuts out all of the crap and bureaucracy from the business process. How can we eliminate the wasted process
steps, quality impediments and the technology hurdles when deploying enterprise
meta-data? Clearly defining the business processes is a great starting place,
then working to streamline them to the highest degree possible.

There are 2 things that the CLEC's could do - Outstanding Customer Service and one-page billing. Heck, any CLEC that offered a SIMPLE one-page bill which anyone could decipher would be able to take market share. Most phone bills are impossible to decode. Along comes VOIP and bills start getting simpler. Even my TW Cable bill is a one-pager. Simple and easy.

Couple that bill with Starbucks or Disney style customer service. Starbucks calls its employees baristas and they are coffee evangelists. Where are the internet evangelists or VOIP revivalists or the Technology missionaries?

All in all, I think the CLEC's have always been focused on the wrong things. It's time to be customer-centric. Maybe hire a VP of Customer Service from Starbucks, Lowes or Disney. Get a VP of Marketing from Harley Davidson or UPS. Or get any exec from Intel, IBM, 3M, or Dutch Boy. But stop the Bell-Head mentality.

The Internet is pervasive in business and voice is essential for business --- this is a key to sales: They need what you sell.